What does it mean to be competitive in today's global economy?
Companies need to be responsive to market changes, achieve high
service levels while remaining profitable, and support an infrastructure
that allows you to make timely, accurate decisions - all without
carrying a lot of inventory.
To accomplish all this, your company needs to move beyond the
sequential, linear relationships of the traditional supply chain
and take advantage of e-business tools to adopt a networked, dynamic
approach. Otherwise, you run the risk of being stuck with obsolete
inventory, and losing customers to competitors who can configure
and deliver products with greater speed and accuracy.
mySAP Supply Chain Management (mySAP SCM) provides best practices,
content, and tools to support the needs of the networked supply
chain, and give you that competitive edge.
mySAP SCM: Understanding the Key Functional Capabilities
mySAP SCM is a comprehensive supply chain planning and execution solution
(see Figure 1) designed to promote efficient and smooth collaboration
in a networked environment that links your suppliers' suppliers to your
customers' customers. The mySAP SCM solution provides:
- Visibility in supply and demand among all trading partners.
- Synchronization within the supply chain, which allows all partners
to make optimized sourcing, planning, and execution decisions.
- Improved responsiveness that enables companies to better plan, commit,
produce, and fulfill.
|Supply Chain Collaboration
- Share information and integrate processes up and down the supply
- Internet-enable processes, such as collaborative planning,
forecasting, and replenishment (CPFR) and vendor-managed inventory.
- Create an online supply chain community that enables partners
to collaborate on design, procurement, demand and supply management,
and other supply chain activities.
- Network your supply chain through private exchanges to link
your commerce community.
|Supply Chain Performance
- Report key measurements in the supply chain, such as filling
rates, order cycle times, and capacity use.
- Integrate planning and execution functions with information
from mySAP Business Intelligence.
|Supply Chain Event
- Monitor every stage of the supply chain process, from price
quotation to the moment the customers receive the product, and
receive alerts when problems arise.
- Capture data from carriers, vehicle on-board computers, GPS
systems, and more.
|Supply Chain Design
- React quickly to changing market conditions, such as product
launches and new customer segments.
- Improve supplier selection, design distribution concepts, and
enhance transportation networks.
- Simulate networks to see what approach will work best.
|Collaborative Demand and Supply Planning
- Develop a one-number forecast of customer demand by sharing
demand and supply forecasts instantaneously across multiple tiers.
Enable suppliers and vendors to use shared forecasts and real-time
demand signals to automatically replenish stock.
- Precisely forecast demand, and plan accordingly over the supply
- Match demand to supply to maximize return on assets.
- Manage the complete procurement process, from sourcing to ordering
- Global visibility into direct material spending.
- Compare bids and evaluate service levels, such as quality and
on-time delivery. Allow partners to leverage buying clout and
reduce ad hoc spending.
- Support a complete manufacturing environment, from planning
to execution and analysis in both discrete and process industries.
- Adopt a flexible approach to engineering changes and customer
requirements. Optimize plans and schedules while considering resource,
material, and dependency restraints.
- Fulfill orders from all channels on time with order management,
transportation planning and vehicle scheduling, freight cost management,
transportation order processing, and carrier collaboration.
- Support the entire logistics process, including picking, packing,
shipping, and international activities. Commit to delivery dates
in real time.
- Check the availability of finished products, components, and
resources in seconds via global available-to-promise.
|mySAP SCM at a Glance
The following sections explain each of
the key capabilities of mySAP SCM, and the roles they play in planning
and execution across the entire supply chain.
Supply Chain Collaboration: Visibility Across the Entire
Supply Chain Network
mySAP SCM's collaborative functions allow
companies to share information with all supply chain partners, giving
full visibility to:
- Supplier and customer allocations
- Inventory levels
- Forecasts and production plans
- Key performance indicators (KPIs)
With supply chain collaboration, you have
the key e-business processes needed for supply chain planning and execution
beyond the boundaries of a single company or enterprise. The result -
open, interactive dialog between supply chain partners via the Internet
- is improved service and reduced inventory costs.
Private Exchanges: Leveraging Market Dynamics and Efficiencies
Private exchanges enable companies to integrate customers, suppliers,
and partners into supply chain processes. mySAP Supply Chain Management
allows your enterprise to operate its own private exchange and bring your
suppliers, partners, and customers together into a networked environment.
Through the exchange, partners can collaborate, share information, plan,
and coordinate - and increase speed and responsiveness across the supply
Private exchanges within mySAP SCM incorporate
these four basic building blocks:
- SAPMarkets MarketSet infrastructure for portal building, user management,
and document exchange is the basis for the private exchange architecture.
- E-Supply Chain Agents enable synchronized communications between
the exchange and other systems or marketplaces - whether inside or outside
- SAPMarkets E-Core provides generic e-business features such as Content
Management and Bulletin Boards.
- E-Supply Chain Services, such as Supply Chain Collaboration, Order
Promising, and Supply Chain Event Management, play a central role in
mySAP SCM can help your company use online
exchanges to collaborate, share information, plan, and coordinate across
the supply chain - and allow you to:
- Increase sales for all partners through reliable customer service,
faster time-to-market, and mass customization, so that you produce the
right product in the right amount, at the right place at the right time
- all the time.
- Reduce costs through shorter cash- to-cash cycles, improved utilization
of assets, strategic sourcing, and decreased logistics expenditures.
- Achieve faster time-to-market by streamlining design processes, thereby
sharpening your competitive edge and improving sales and margins.
- Increase return on assets through improved visibility of demand,
inventory, and capacity information, so you can deploy equipment and
inventory more efficiently.
Supply Chain Performance Management: Measuring the
Success of Your Supply Chain
Defining overall strategies and goals based on key performance indicators
(KPIs) allows you to measure, compare, and set targets for your supply
chain activities. mySAP SCM offers real-time supply chain performance
measurement and benchmarking, and automatically sends alerts to planners
when performance deviates from the plan. In combination with mySAP Business
Intelligence (mySAP BI), mySAP SCM also helps identify areas for overall
supply chain improvement in line with your current set of metrics. Metrics
used are based on the SCOR model.
Supply Chain Design: Allowing You to Respond to Change
Companies need to react to changing market conditions, such as new product
launches and new customer segments, and align their supply chain infrastructures
accordingly. The Supply Chain Design feature of mySAP SCM helps by providing
information on supplier selection, distribution, transportation networks,
and production locations.
Network Design, the main feature of mySAP
SCM Supply Chain Design, is key to strategic planning in mySAP SCM. It
supports location selection, decisions for coordination of transportation
lanes and supply relationships, and analysis of the complex relationships
between location and production (see Figure 2). Network Design
optimizes geographical distances and costs, taking account of demand structures
and resources, and allows you to compare planning results and what-if
analyses in a graphical or tabular viewer.
Supply Chain Design also supports regular
evaluation and control of existing supply chain networks, and is seamlessly
integrated with other elements of mySAP.com, such as mySAP BI.
Collaborative Demand and Supply Planning: Matching
Demand to Supply to Maximize Return on Assets
An ever-present challenge to supply chain management is forecasting demand,
and optimizing material flow along the supply chain - and with the networked,
collaborative supply chain, this challenge is even greater. mySAP SCM
Collaborative Demand and Supply Planning enables supply chain partners
to analyze demand, taking into account historical buying and selling behavior,
market intelligence, and sales objectives (see Figure 3).
|mySAP SCM Collaborative Demand and Supply Planning
In the collaborative model, partners join information
to derive the total supply chain requirements. Collaborative Demand and
Supply Planning also includes extensive statistical forecasting methods
and tools for causal analysis, lifecycle modeling, and promotion planning, along with vendor-managed inventory (VMI) technologies,
safety stock planning, and simulation.
Collaborative Procurement: Manage, Enhance, and Automate
the Procurement Process
As Internet trading processes make markets more global and transparent,
capitalizing on dynamic market opportunities is key. Not only does mySAP
SCM Collaborative Procurement monitor external materials needed for production,
but it also supports Internet purchasing functions, and includes rule-based
procurement processes, automated replenishment, and multiple supplier
When the system schedules externally procured
orders, the goods receipt and transportation capacity information is factored
in early, so purchase order quantities can be optimized accordingly. As
a result, the system can automatically select the optimal source to deliver
a sufficient quantity of goods that meet time and other specifications.
If the usual supply sources cannot fulfill a peak in demand, the system
can start a request on an Internet marketplace.
Collaborative Procurement functions take
these procurement processes to your partners. As you work closely with
suppliers to accelerate the flow of information - regarding delivery schedules,
for example - you reduce lead time.
Manufacturing: Controlling Production Processes with
an Industry-Specific Approach
By integrating manufacturing with other supply chain processes, mySAP
SCM Manufacturing ensures a fast and flexible approach to engineering
changes and customer requirements. It creates feasible, optimized production
schedules, taking into account material and capacity constraints.
Within its Manufacturing capability, mySAP
SCM offers tailored solutions for a diverse set of industries (high- tech,
chemical/pharmaceuticals, and consumer goods, to name a few) and production
processes (make-to-order, make-to-stock, etc.). With this close integration
of commercial and technical applications, information on the progress
of production is available immediately to all supply chain processes.
Collaborative Fulfillment: Managing the Order from
Start to Finish
mySAP SCM's Collaborative Fulfillment process comes into play when an
order is accepted, continues through outbound delivery to customers, and
ends with the billing document. In mySAP SCM:
- Customers can obtain information about the availability of products,
and can submit orders by mail, Internet, or phone via a call center.
- Suppliers, customers, and carriers can use the Internet for tendering,
tracking, and proof of delivery.
- Companies can intelligently commit delivery dates in real time and
fulfill orders from all channels on time through optimized manufacturing,
ware- housing, and transportation processes.
- Real-time, global available-to-promise (ATP) checks are included
to locate finished products, components, and machine capacities in a
matter of seconds.
mySAP SCM includes order management features
for creating quotations and sales orders, along with transportation management
features for optimal scheduling and planning of transportation resources.
Its transportation management functions also give planners the ability
to work with carriers to arrange for shipments that will arrive on time
and within budget.1
Supply Chain Event Management: Tracking Goods Across
Your Supply Chain
Once paperwork and foreign trade processing are completed, the goods
are transported to customers. Then you need to track shipments, checking
the shipment's location and whether it is on schedule. After the customer
receives the goods, the customer's billing document needs to be created
and the carrier will receive a credit note for the services rendered.
mySAP SCM Supply Chain Event Management
(SCEM)2 provides tracking and notification on
order status for partners and processes in the supply chain. SCEM monitors
all milestones in the supply chain process, from price quotation to procurement
to delivery. This provides a completely integrated overview of the processes
of different partners (carriers, couriers, parcel services) in the supply
SCEM's monitoring functions survey process
milestones and raise alerts that may result in various kinds of responses
- whether they are mail, APO alerts, or automatic process rescheduling.
Via the web, partners can access personalized information about the process
status, and then, down the road, planners and managers can analyze execution
and reporting compliance data to improve processes or evaluate service
mySAP SCM can be fully integrated with
other mySAP.com applications, including mySAP Product Lifecycle Management,
mySAP Business Intelligence, mySAP E-Commerce, and mySAP Customer Relationship
Management. You can also integrate it with non-SAP systems to capitalize
on your ERP investment.
The Effect on Your Bottom Line ... And Your Customers
mySAP Supply Chain Management powers e-business processes across every
element of the supply chain by enabling companies, their partners, and
their customers to share key information. Increased automation and the
rise of e-marketplaces result in a more efficient supply chain process,
with reduced order cycle times, speedier conversion of materials into
revenue, and decreased inventories. Instead of investing in material,
companies can invest in their future, with improved ability to meet unexpected
Relationships with both partners and customers
can improve. With real-time tracking of products worldwide, and more accurate
order status information, the possibilities for improved service mean
higher customer satisfaction. As you react more quickly to changing customer
requirements with mySAP SCM, you move from a supply-centric to a customer-centric
demand chain, in which customer demand is what drives production and replenishment.
It is the power to collaborate with partners
and optimize supply planning and execution across enterprise boundaries
that enables companies to make full use of the potential that lies within
their supply chains.
Katrin Ströbel works in Program Management in the General Business
Unit Supply Chain Management (GBU SCM) at SAP AG in Walldorf. Her work
includes supporting topics related to mySAP Supply Chain Management planning
features. Prior to joining the Program Management group, she was Product
Manager for Supply Chain Design.
1 See "mySAP SCM and Transportation Planning
and Vehicle Scheduling: Optimize Shipping Resources with SAP's Powerful
Transportation Planning Engine" by Bernd Mosbrucker in this issue of SAP
2 For more on Supply Chain Event Management,
see "Identify Problems Before They Derail Your Supply Chain" by Bernd
Lauterbach and Oswald Wieser in this issue of SAP Insider.